1. Technical Field of the Invention
The principles of the present invention generally relate to aircraft ownership and services, and, more specifically, but not by way of limitation, to fractional ownership of an aircraft and management thereof.
2. Description of Related Art
There are a diverse variety of aircraft travelers that range from business to tourist travelers. To accommodate this variety of aircraft travelers, the airline industry has evolved to satisfy the needs of the travelers. Commercial airline companies have formed and expanded the capacity of a wide range of air travel routes to accommodate the requirements of business and pleasure travelers. However, more affluent travelers, such as business executives, have sought less general commercial means of aircraft travel, including charter aircraft services and aircraft fractional ownership services.
Each of the aircraft travel services (i.e., commercial, charter, and fractional ownership) are regulated by the Federal Aviation Administration (FAA). Commercial airlines operate under a Federal Aviation Regulation (FAR) Part 121 certification, charter airlines services operate under a FAR Part 135 certification, and fractional ownership services generally operate under a FAR Part 91 certification. In general, the rules governing the commercial airlines are the most stringent because the general public is involved; the rules governing charter airline services are less stringent, but still rigorous, because charter airline services operate basically as an air taxi service for the public; and the rules governing the fractional ownership operators is even less stringent because fractional ownership is sufficiently private in nature.
The different aircraft travel services have strengths and weaknesses. For the purposes of the discussion at-hand, the strengths and weaknesses are considered from the point-of-view of business travelers, high-end travelers (e.g., those who seek high quality air travel service, such as first class), and those seeking to avoid commercial airline travel.
Commercial airline travel has become increasingly difficult, inconvenient, and costly in recent years. As the commercial airline industry has grown to the point that air travel is affordable to most people, generally if planned in advance, airport congestion has resulted in delays at ticket counters, security checkpoints, boarding and de-boarding, and luggage retrieval. The increase in security measures practically mandates early airport arrival of two or more hours, which makes business traveling exceedingly challenging and problematic. Furthermore, due to a decrease in flight schedules (e.g., travel routes and times) by commercial airlines for profitability concerns, business travelers who want to make a one day trip to another large city or remote city can no longer do so due to the decreased flight schedules and airport congestion.
Business travelers have suffered a significant loss in productivity and increase in expense as one-day or longer trips require longer “down time” and additional hotel, vehicle, and meal accommodations, for example. Because of the commercial business practices, last minute travel plans dramatically increase the cost of airfares. For medium range flights (e.g., 1,000 to 2,000 miles), the cost of a coach fare ticket can be $2,000 or more. Such ticket prices often become cost prohibitive, especially if two or more business associates require travel.
Charter aircraft services provide an alternative for those seeking air travel service other than commercial airline services. Charter aircraft services essentially provide air travel taxi services. While the charter aircraft services may provide convenience, in general, aircraft charter prices are costly and airplane maintenance, pilot skill, and other passenger identity and backgrounds are unknown variables of concern by a charter aircraft passenger. On the whole, aircraft charter prices tend to be expensive due to the aircraft typically being chartered by much less than a full capacity of passengers. And, due to the nature of aircraft travel, the aircraft often flies the return trip without passengers, known in the industry as a “dead-head”. Furthermore, the passengers must fly with pilots with whom they are unfamiliar and who have unknown training and experience. The cost and unknown variables for utilizing charter aircraft services tend to impose barriers for potential passengers from cost, emotional, and security standpoints.
Fractional ownership of an aircraft has become a growing industry in response to lowered aircraft prices, increased affluence of the population, increased airport congestion, and reduced commercial airline services. Fractional aircraft ownership basically allows more than one owner to time-share aircraft usage and split purchase and ownership fees. Typically, fractional aircraft operators charge the fractional owners fixed and monthly fees, where the fixed fees cover hanger costs, maintenance costs, operational management costs, and pilot salaries, for example, and the variable fees cover usage expenses, such as fuel and maintenance expenses, including scheduled and hourly.
Often, fractional owners of the aircraft do not fully utilize their monthly or yearly usage portion and, thus, spend excess money. Additionally, the fractional owners receive requests from business associates, friends, or family to utilize unused monthly air travel service. The FAR Part 91 certification, however, does not provide for anyone other than the fractional owners to utilize the aircraft and pay for the usage, including other passengers paying the owner directly for usage other than as permissible under FAR guidelines. For example, currently under FAR Part 91.501(d), certain expenses, such as fuel, may be recovered from a non-fractional owner passenger. In other words, under a FAR Part 91 certificate, neither the fractional aircraft operator nor the owner can recover monies to offset monthly management fees and the like paid by the fractional owner.
As is the case with the charter aircraft services, possibly even more so, a fractionally owned aircraft quite often (i) flies an originating flight far below capacity, (ii) returns to its home location without passengers, (iii) returns to pick up the fractional owner without passengers, and (iv) returns to its home location below capacity. While fractional operators strive to maximize usage and capacity of the aircraft by routing schedules to pickup other fractional owners, the average number of passengers of a fractionally owned aircraft is 2.8 (note, the typical business jet aircraft is eight seats). The costs and expenses that the fractional operator incurs due to flying below capacity and dead-head flights simply is passed through to the fractional owners in the form of fixed and variable monthly fees. These fixed and monthly fees tend to be cost prohibitive for many potential fractional owners who desire the benefits of such aircraft services. And, unless the fractional operator continues to sell fractional aircraft ownership shares to new owners, the current fractional ownership business model for servicing new and existing fractional owners shows limited growth potential.
Often times, to utilize a fractionally owned aircraft to generate revenue during times that the aircraft would otherwise be idle, the fractional owner allows a separate charter aircraft service to operate the aircraft under a FAR Part 135 certification. While this practice allows the aircraft to generate some revenue, the owner essentially loses operational command and control of his aircraft while the aircraft is under the control of the charter service. The fractional owners aircraft are generally flown by pilots of unknown skill and qualifications, customers that are of unknown origin that have not undergone any security clearance and the owner has no control of what the aircraft carries in terms of passengers and cargo.